Resource management for Sustainable Development of Island Economies

What is the role of resource management in sustaining competitiveness for island economies such as the Republic of the Philippines and Hawaii? We review the history of thought on sustainable resource management and sustainable development and then turn to the threats to sustainability from the resource curse and the parallel curse of paradise. We show how the resource curse undermines the pursuit of sustainability and describe innovations in governance that can transform the curse into a blessing.Resource curse, sustainable development, Dutch disease

Economic Policy for Sustainable Growth and Development vs. Greedy Growth and Preservationism

Sustainability science emerged from the felt need to employ appropriate science and technology in the pursuit of sustainable development. The existing sustainability science agenda emphasizes the importance of using a systems approach, stressing the many interactions between natural and human systems. Despite its inertia and avowed purpose of being practical and feasible, however, sustainability science has yet to embrace the policy sciences. In pursuit of this objective, we first trace the history of thought of sustainable development, including its definition and operationalization. Sustainable development encompasses sustainable growth and dynamically efficient development patterns. Two promising approaches to sustainable growth are contrasted. Negative sustainability counsels policy makers to offset any decrease in natural capital with at least the same value of net investment in produced capital. This sustainability criterion cannot determine how and how much to conserve natural capital nor how much to build up human and productive capital. Indeed, there is ambiguity regarding what prices to use in summing the values of diverse capital assets. To fill the void, we offer positive sustainability, which maximizes intertemporal welfare while incorporating system linkages, dynamic efficiency, and intertemporal equity. This provides a solid and operational framework for sustainable growth. In addition, sustainable development must include the lessons from development theory, including how optimal patterns of production, consumption, and trade change with standards of living. However, like Tolstoy’s unhappy families, there are many pathways to unsustainable development. We describe two broad causes of unsustainable growth – rent-seeking and preservationism. We also illustrate patterns of unsustainable development by drawing on lessons from the Philippines. While specialization is the engine of growth, fragmentation is the anchor. In addition to natural fragmentation from natural trade barriers in an island archipelago, policy and governance, driven by rentseeking, promote economic stagnation. Low economic growth in turn exacerbates population pressure and environmental degradation—the vicious circle of unsustainable development. We give particular attention to how a resource curse can exacerbate policy distortions and rent-seeking, and how the same phenomenon can be promulgated by foreign aid, foreign direct investments, remittances, and tourism. For sustainable development not to be at odds with policy science, positive sustainability must be combined with projects and policies that promote dynamic comparative advantage and poverty reduction. We emphasize the facilitative role of government especially in transforming the vicious circle into a virtuous circle.Sustainable development and patterns, positive sustainability, specialization, the Philippines

Resources for Peace? Managing Revenues from Extractive Industries in Post-Conflict Environments

Revenues from extractive sectors such as oil and gas, minerals, and logging play an important role in many post-conflict environments, often providing more than 30% of state fiscal receipts. When managed well, these revenues can help to finance postwar reconstruction and other vital peace-related needs. When mismanaged, however, resource revenues can undermine both economic performance and the quality of governance, thereby heightening the risk of renewed violence. This paper offers a number of proposals for managing revenues from extractive industries to better support peacebuilding.Extractive resources; oil revenues; peacebuilding; revenue-sharing

Real Exchanges Rates in Commodity Producing Countries: A Reappraisal

Commodity currency literature recently stressed the importance of commodity prices as a determinant of real exchange rates in developing countries (Cashin, Cespedes and Sahay 2004). We provide new empirical evidence on this issue by focusing on countries which are specialized in the export of one leading commodity. For those countries, we investigate to which extent their real exchange rate is sensitive to price uctuations of their dominant commodity. By using non-stationary panel techniques robust to cross-sectional-dependence, we find that the price of the dominant commodity has a significant long-run impact on the real exchange rate when the exports of the leading commodity have a share of at least 20 percent in the country's total exports of merchandises. Our results also show that the larger the share, the larger the size of the impact.Real exchange rates,commodity prices,non-stationary panel

On Using a Support Vector Machine in Learning Feed-Forward Control

For mechatronic motion systems, the performance increases significantly if, besides feedback control, also feed-forward control is used. This feed-forward part should contain the (stable part of the) inverse of the plant. This inverse is difficult to obtain if non-linear dynamics are present. To overcome this problem, learning feed-forward control can be applied. The properties of the learning mechanism are of importance in this setting. In the paper, a support vector machine is proposed as the learning mechanism. It is shown that this mechanism has several advantages over other learning techniques when applied to learning feed-forward control. The method is tested with simulation

Low-Mass and Metal-Poor Gamma-Ray Burst Host Galaxies

Gamma-ray bursts (GRBs) are cosmologically distributed, very energetic and very transient sources detected in the gamma-ray domain. The identification of their x-ray and optical afterglows allowed so far the redshift measurement of 150 events, from z = 0.01 to z = 6.29. For about half of them, we have some knowledge of the properties of the parent galaxy. At high redshift (z > 2), absorption lines in the afterglow spectra give information on the cold interstellar medium in the host. At low redshift (z < 1.0) multi-band optical-NIR photometry and integrated spectroscopy reveal the GRB host general properties. A redshift evolution of metallicity is not noticeable in the whole sample. The typical value is a few times lower than solar. The mean host stellar mass is similar to that of the Large Magellanic Cloud, but the mean star formation rate is five times higher. GRBs are discovered with gamma-ray, not optical or NIR, instruments. Their hosts do not suffer from the same selection biases of typical galaxy surveys. Therefore, they might represent a fair sample of the most common galaxies that existed in the past history of the universe, and can be used to better understand galaxy formation and evolution.Comment: Invited contribution, to appear in proceedings of IAU Symposium 255: "Low-Metal licity Star Formation: From the First Stars to Dwarf Galaxies", Rapallo June 2008, L.K. Hunt, S. Madden & R. Schneider, ed

A Conceptual Overview to Understand Commodities, Linkages and Industrial Development in Africa

Sub-Sahara African commodity exporting economies have benefitted greatly from the commodities boom of the past decade. The conventional wisdom argues that resource extraction is corrosive of industrial development due to a combination of the macroeconomic consequences of resource exploitation and the assumed enclave nature of mineral and energy extraction. The paper challenges this pessimistic ‘resource curse’ argument, arguing that there are unexploited opportunities for promoting industrial development through the development of linkages from the commodities sector. In particular, these opportunities may be greater for backward than for forward linkages, particularly in the minerals and energy sectors. In making this case, this Discussion Paper draws on the experience of high-income countries which have resource-intensive economic structures, the geographical specificity of many resources and the growing interest of large resource-extracting firms in outsourcing the production of inputs which are outside of their core competences, It sets out a general model of linkages between industry and services and the commodities sector which distinguishes between win-win and win-lose outcomes. The paper concludes with a brief review of the reasons why Governments might wish to intervene to support linkages between the commodities and the industrial and service sectors

Rapacious Resource Depletion, Excessive Investment and Insecure Property Rights

For a country fractionalized in competing factions, each owning part of the stock of natural exhaustible resources, or with insecure property rights, we analyze how resources are transformed into productive capital to sustain consumption. We allow property rights to improve as the country transforms natural resources into capital. The ensuing power struggle about the control of resources is solved as a non-cooperative differential game. Prices of resources and depletion increase faster than suggested by the Hotelling rule, especially with many competing factions and less secure property rights. As a result, the country substitutes away from resources to capital too rapidly and invests more than predicted by the Hartwick rule. The power struggle boosts output but depresses aggregate consumption and welfare, especially in highly fractionalized countries with less secure property rights. The theory suggests that adjusted net saving estimates calculated by the World Bank using market prices over-estimate welfare-based measures of genuine saving.exhaustible resources, Hotelling rule, Hartwick rule, capital, sustainable consumption, fractionalization, seepage, insecure property rights, differential game, genuine saving, adjusted net saving

The Impact of the Terms of Trade on Economic Development in the Periphery, 1870-1939: Volatility and Secular Change

Most countries in the periphery specialized in the export of just a handful of primary products for most of their history. Some of these commodities have been more volatile than others, and those with more volatile prices have grown slowly relative both to the industrial leaders and to other primary product exporters. This fact helps explain the growth puzzle noted by Easterly, Kremer, Pritchett and Summers more than a decade ago: that the contending fundamental determinants of growth—institutions, geography and culture—exhibit far more persistence than do the growth rates they are supposed to explain. Using a new panel database for 35 countries, this paper estimates the impact of terms of trade volatility and secular change on country performance between 1870 and 1939. Volatility was much more important for accumulation and growth than was secular change. Additionally, both effects were asymmetric between Core and Periphery, findings that speak directly to the terms of trade debates that have raged since Prebisch and Singer wrote more than 50 years ago. The paper also investigates one channel of impact, and finds that foreign capital inflows declined steeply where commodity prices were volatile.